WASHINGTON  An independent audit of the Federal Election Commission, conducted
over the past eight months and submitted to Congress today by the firm of
PricewaterhouseCoopers LLP (PwC), determines that the Commission executes its duties
" without partisan bias," and addresses the necessity for Congress to
authorize mandatory electronic filing of campaign reports.

The audit was mandated by Congress in 1997, with an earmarked allocation of $750,000
from the FECs FY98 budget. PwC was awarded the audit contract by the General
Accounting Office through competitive bidding. The firm began its work in June of 1998 and
submitted its final audit report to the GAO, Congress, and the FEC today, January 29,
1999.

"We are gratified that the PwC review revealed several positive aspects of the
FECs operations. Most significantly, PwC noted that the FEC by and large is a
competently managed organization with a skilled and motivated staff, that we execute our
disclosure and compliance duties without partisan bias, and that there is a high degree of
customer satisfaction with our products and services.

"With regard to the various improvement opportunities identified by
PwC, we note that several (such as migrating to a new disclosure database and implementing
a new computer-based case management system) reflect recommendations or actions already
under way or suggested by the FEC itself. Further, several, such as mandatory electronic
filing for certain committees, require legislative action.

"We will give each PwC recommendation serious consideration. Some may require
additional cost/benefit analysis. We will work closely with Congress to effect those
changes that will improve the FECs operations," the Commissioners
statement concludes.

In the reports Executive Summary, the PwC auditors state: "The FEC is
basically a competently managed organization with a skilled and motivated staff, although
it has its shortcomings. The ability of the FEC to adapt to the changing election
environment, however, has been hindered by the FECA [Federal Election Campaign Act]
statute itself, escalating campaign finance disclosure and compliance workloads, and an
organizational culture that has attempted incremental change in a deadline-driven
environment stretched by limited resources."

Specific FEC strengths the independent audit report cites include:

Disclosure and compliance activities are executed without a partisan bias. The report
gives an "unqualified yes" to the question: "Are FEC programs conducted in
a non-partisan, ethical, and independent manner?" The report states that "high
ethical standards are espoused throughout the organization," that a "high level
of confidentiality is maintained" and there is "no partisan bias evident in the
release of public records or information."

On balance, the surveyed filing community is quite satisfied with the products and
services provided by the FEC. "While the level of usage of products and services
varies, the degree of satisfaction is consistently positive. A telephone survey of 353
randomly selected filers was used to assess satisfaction, and those surveyed filers
generally perceived the Commission to be fair and non-partisan. On a scale from 1 to 10,
where 1 means poor and 10 means excellent, surveyed filers gave the FEC an average rating
of 8 on how well it was doing its job," the report notes.

FEC " places a premium on facilitating voluntary compliance, and the
regulated community values the products and services designed and employed by the FEC to
enhance this voluntary compliance. "

"Productivity has increased in the processing, review, and dissemination of
campaign finance transactions in the face of increasing workloads."

"Confidentiality of potential and existing compliance matters is maintained
throughout the report review, referral, audit, and enforcement processes."

"The Congress and the FEC need to initiate actions that will eventually allow the
FEC to shift some resources from its disclosure activities to its compliance programs by
the following means: develop a comprehensive, mandatory electronic data filing system for
the major filers in conjunction with a significant business process reengineering
throughout the FEC; redesign disclosure processes (using industry standard software) and
realign organizational units to improve processing time, accuracy, and cost."

"The Commissions Enforcement Priority System (EPS) is a system for
prioritizing enforcement matters in the face of limited staff resources. The EPS is a
reasonable triage approach and operates without evident partisan bias. EPS allows the FEC
to exercise prosecutorial judgment while providing sufficient structure to differentiate
among cases for Commissioner disposition. Improvements to strengthen the accountability of
the case activation system and an increase in enforcement resources to expand the number
of cases activated for disposition would enhance compliance effectiveness."

The FEC should be authorized to move " non-deliberate and straightforward
reporting violations, such as failure to meet reporting deadlines, away from the
enforcement process and into an administrative fine system to allow enforcement resources
to handle more significant violations."

The reports Executive Summary also notes, "The FEC faces an increasing and
volatile workload with the year 2000 election cycle that features a non-incumbent
Presidential election. Increased FTE [employees] and automated data processing initiative
resources should facilitate improved FEC FY1999 program performance. Depending on the
number of Presidential candidate committees, the size of the enforcement caseload and the
Commission desire to increase case activation rates, additional compliance resources in
FY2000 may be warranted above normal inflation adjusted levels. FY2000 appropriations
should be conditioned on the agencys continued progress in implementing
opportunities to increase productivity in its disclosure and compliance programs."

The reports summary concludes, "The threat of the increasing volume and
volatility of workload for the FEC is real and near. Failure to change will lessen the FEC
capacity to meet its basic FECA requirements, while at the same time it will require
ever-increasing staff resources to meet those minimal requirements. Change will not be
easy, but it will be necessary if the FEC is to meet the difficult challenges it faces.
Change will have to come from both inside and outside the FEC. This study has identified
many steps that the FEC can take on its own to streamline operations, enhance management
practices, and redesign business processes to leverage technology initiatives. However,
several actions such as the authorization for mandatory electronic filing, the
establishment of an administrative fine system, and the institution of a single
point-of-entry for all registered committees will require Congressional action. Without
these authorizations, it will be difficult for the FEC to capitalize on the many
opportunities identified."

# # #

Note to editors, correspondents, and broadcasters: The official title of the audit
report is "Technology and Performance Audit and Management Review of the Federal
Election Commission." It can be viewed on the General Accounting Offices
Website, at www.gao.gov/special.pubs/publist.htm. Media Relations contact at
PricewaterhouseCoopers is David Nestor, 212-259-4855.